COVID-19: The facts as of March 12, 2020

There are lots of things happening around the coronavirus epidemic - sorry, it's a pandemic now - but most of them revolve around issues we've already addressed in earlier articles here, and others have addressed ad nauseam elsewhere.  Still, it's good to have accurate, insightful information on which to base our own decisions and actions, and that's what I try to present here.

Let's start with the situation in health care.  It's looking pretty dire.  Italy has so many cases of the disease that doctors have advised medics to "stop treating the elderly and focus on those with better survival chances".  That's really hard to hear if you, like me, are officially classified - even if just barely - among the "elderly" to whom they're referring.

Guidance published by a top Italian health agency has now suggested that rather than admit patients on a “first come first served” basis, hospitals should swap to “catastrophe medicine” guidelines.

These guidelines are typically used in war zones and during natural disasters.

If a limit on beds is implemented it could mean elderly patients with no signs of coronavirus being turfed off ICU wards to make space for younger patients who have longer left to live.

There's more at the link.

Folks, if you're thinking "Well, that's Italy.  It'll never happen here!", then you need to reassess your thinking right now, if not sooner.  When the numbers get high enough, this sort of triage will, repeat, WILL happen here.  The sheer volume of patients will make it inevitable, particularly when aggravated by a desperate shortage of health care personnel (see next citation).  When supplies and care are both short, those best able to benefit from them, and whose recoveries will best benefit society, will get priority.  The rest of us will be S.O.L.

Oh - and about shortages of health care personnel:

As the U.S. battles to limit the spread of the highly contagious new coronavirus, the number of health care workers ordered to self-quarantine because of potential exposure to an infected patient is rising at an exponential pace. In Vacaville, California, alone, one case — the first documented instance of community transmission in the U.S. — left more than 200 hospital workers under quarantine and unable to work for weeks.

Across California, dozens more health care workers have been ordered home because of possible contagion in response to more than 80 confirmed cases as of Sunday afternoon. In Kirkland, Washington, more than a quarter of the city’s fire department was quarantined after exposure to a handful of infected patients at the Life Care Center nursing home.

With the number of confirmed COVID-19 cases mushrooming by the day, a quarantine response of this magnitude would quickly leave the health care system short-staffed and overwhelmed.

. . .

National Nurses United, a union representing more than 150,000 nurses, recently held a news conference to call on hospitals to better protect their workers. Of the 6,500 nurses who participated in a survey the union circulated, fewer than half said they had gotten instruction in how to recognize and respond to possible cases of COVID-19. Just 30% said their employer has sufficient protective equipment on hand to protect staff if there were a surge in infected patients.

Again, more at the link.

We need to spare more than just a thought for our health care and emergency response personnel.  They're on the front lines in the fight against this disease, and many of them are already paying the price through becoming infected.  In Italy, many health care workers are no longer going home to their families, for fear of infecting them.  Instead, they're effectively living at work, quarantining themselves along with the sick.  That's dedication with a capital "D".  I hope that some sort of recognition will be given to them when that's possible, preferably one involving high-denomination dollar bills.  They'll have earned it the hard way.  We should be more than grateful to them.

We should be particularly thankful for those medics, nurses and doctors who are trying to keep us informed, and bring us accurate information.  There are many of them, but one who stands out is Aesop, writing at his blog Raconteur Report.  (His latest article is here, and is well worth reading.)  Aesop, from this non-medic, a grateful doff o' the hat, and prayers for your safety.  Please keep us informed - and take care of yourself!

Simple mathematics, applied to the spread of the coronavirus, tell us how the US health care system is likely to be impacted.

We can expect a doubling of cases every six days, according to several epidemiological studies. Confirmed cases may appear to rise faster (or slower) in the short term as diagnostic capabilities are ramped up (or not), but this is how fast we can expect actual new cases to rise in the absence of substantial mitigation measures.

That means we are looking at about 1 million U.S. cases by the end of April; 2 million by May 7; 4 million by May 13; and so on.

The latest figures from Worldometer, shown in graphical format below, offer no signs of any major reduction in the infection rate worldwide, even though some countries are reporting successes.  (Of course, those figures are only as reliable as the countries reporting them, and we all know about how untrustworthy some of those numbers are.  Bear in mind that errors are likely to be on the conservative, optimistic side of reality.  Things may be worse than these figures convey.)

There are signs that the death rate from COVID-19 may be better than the raw numbers above indicate.  South Korea, in particular, is showing an encouraging trend.

“If we can test more people – whether they have no symptoms, mild or severe disease – the results, including the case fatality rate, are more accurate and representative when the whole disease spectrum is taken into consideration,” said David Hui Shu-cheong, an expert in respiratory medicine at the Chinese University of Hong Kong.

“Most countries just focus on testing the hospitalized patients who obviously have more severe disease, and [thus] the fatality rate is high.”

South Korea, which introduced a system to grant the rapid approval of testing kits for viruses after 2015’s outbreak of Middle East respiratory syndrome in the country that killed 38 people, has won international plaudits for the scale and speed of its screening regime, which includes drive-through stations that can test members of the public in minutes.

. . .

One question puzzling disease experts has been Covid-19’s mortality rate, which has seemingly ranged from 2-3% in China up to 10% in Iran, based on official numbers . . . World Health Organization Director-General Tedros Adhanom Ghebreyesus on Tuesday said the global mortality rate from Covid-19 recorded so far was about 3.4%, higher than previous estimates.

Yet in South Korea ... the mortality rate appears to be hovering around 0.64%.

While this is still several times more lethal than seasonal influenza, which kills about 0.1% of the people it infects – 30,000-40,000 people in the US alone each year – South Korea’s rate is far lower than that seen elsewhere.

Let's hope that in countries with advanced health care systems, that pattern is repeated.

All right, that's the health care side of things.  What about the impact of COVID-19 on the economy?  That's not looking very good at all.  Most of us will by now have heard or read about President Trump's address to the nation last night.  I think he's doing the right thing by shutting down easy access to this nation from Europe, just as he did the right thing, early in this crisis, by closing our borders to traffic from China and other early-onset nations.  His actions have probably protected us far more than we know, and we should be grateful for them.  Ignore the Democratic Party and their mainstream media allies as they try to blame the entire crisis on him.  They're lying, as usual - but then we already knew that.  We can expect nothing else from them.  It's the way they roll.

I'm sure that's why the White House decided to classify all high-level discussions about the coronavirus.  If you knew the media and your political opponents would scrutinize every word, looking for ammunition to shoot at you to discredit you and your policies, and help your political opponents, wouldn't you have done the same?  The media may try to classify this as "an unusual step that has restricted information and hampered the U.S. government’s response to the contagion", but it's not.  It's basic common sense.  Those who need to know, do know.  Those who don't need to know can wait until an appropriate time to be told.  Officials don't have time to waste endlessly briefing the media when they should be - and are - working to contain the crisis.

Of course, a lot of the information out there about COVID-19 is suspect.  That includes many alarmist articles in the mainstream media, but also reports in the "alternative" media, and allegedly "expert" articles, even books, by people we've never heard of before.  A number of hastily-written books are offering "expert advice" that turns out to be nothing more than compilations of news articles.  Shysters, fraudsters and imposters have always been with us, and they'll try to take advantage of this crisis, just as they have every previous crisis.  Caveat emptor, and be careful whom you trust to give you accurate information.  (Yes, that includes me.  That's why I try to back up every claim I make with a source reference, so you can check it for yourself, and decide whether or not I'm giving you good information.  I can make mistakes, too!)

The economic impact of COVID-19 is already massive, and is likely to get much, much worse.  In fact, I think the biggest danger to the First World may well be the damage to our economies from this disease.  Supply chains all over the world have been disrupted, and show no signs of recovery as yet.

Notably, nearly 75 percent of companies report supply chain disruptions in some capacity due to coronavirus-related transportation restrictions, and more than 80 percent believe that their organization will experience some impact because of COVID-19 disruptions. Of those, one in six (16%) companies report adjusting revenue targets downward an average of 5.6 percent due to the coronavirus.

"The story the data tells is that companies are faced with a lengthy recovery to normal operations in the wake of the virus outbreak," said Thomas W. Derry, Chief Executive Officer of ISM. "For a majority of U.S. businesses, lead times have doubled, and that shortage is compounded by the shortage of air and ocean freight options to move product to the United States -- even if they can get orders filled."

Primary reported supply chain impacts include the following:

• 57 percent noted longer lead times for tier-1 China-sourced components, with average lead times more than doubling compared to the end of 2019.

• Manufacturers in China report operating at 50 percent capacity with 56 percent of normal staff.

• More than 44 percent of respondents do not have a plan in place to address supply disruption from China. Of those, a majority (23 percent of respondents) report current disruptions.

• Of the companies expecting supply chain impacts, the severity anticipated increases after the first quarter of 2020.

• Six in 10 (62%) respondents are experiencing delays in receiving orders from China.

• More than half (53%) are having difficulty getting supply chain information from China.

• Nearly one-half are experiencing delays moving goods within China (48%).

• Almost one-half (46%) report delays loading goods at Chinese ports.

Rail traffic figures in the USA bear this out.

• In February 2020, US railroad intermodal (i.e. container) shipments were down 8.9% from the same month in 2019.
• For the week ending March 7, intermodal (container) traffic was down 14.9% compared to the same period in 2019.

This has led to "panic buying" in many countries, including our own.  I had to laugh at this editorial cartoon.  Full marks to the artist!

EDITED TO ADD:  Thanks to Cedar Sanderson, I learned that this cartoon is from Theo Moudakis, editorial cartoonist for the Toronto Star newspaper in Canada.  I'm going to look for more of his work.  If it's all this good, he'll become one of my daily reads.

The drop in container traffic is going to get worse.  Most of those containers referenced above were shipped from China before, and during the early stages of, the coronavirus epidemic there.  Very few have been shipped in the past month, and many sailings of container vessels have been canceled due to lack of traffic.  That's now beginning to show up at our harbors, as we discussed last week.  Remember that containers are used to bring in most of our manufactured imports from overseas.  GCaptain reports:

At the neighboring ports of Los Angeles and Long Beach, the two busiest in the U.S. and the main entry points for Chinese goods, work shifts so far this year have dropped 21% compared with the same period a year ago, according to the Pacific Maritime Association. Both facilities just released their February container volumes: Long Beach’s imports dropped 18% from a year earlier, L.A.’s sank 23%.

More broadly, U.S. seaports could see slowdowns of as much as 20% continue into March and much of April, according to the American Association of Port Authorities. The same trend is seen in more distant places, with Rotterdam — Europe’s economic gateway to Asia and beyond — seeing a similar cut of about 20%.

In another report, GCaptain notes:

While the global economy is reeling from the spreading virus, seaports are a bellwether for trade because they handle a hefty 90% of all world shipping. The squeeze on ports like Los Angeles, the biggest in the U.S. for container traffic, illustrates the vast potential for economic harm from a virus-induced slowdown.

. . .

“Alarm is the word,” said Jock O’Connell, a foreign trade consultant in California. “The demand for longshore labor has been down, but the real victims are the truck drivers who get paid by the load and the warehouse workers, who process goods.”

. . .

Los Angeles, especially, is coping with an overload of shipping containers lately and running out of places to store them. The outbreak has disrupted the usual balance of trips between the U.S. and Asia, with too few vessels arriving in L.A. to take the containers back to Asia.

Do please note that last report.  Truck drivers and warehouse personnel are likely to be very hard hit by this downturn, as are retail staff.  Also, if Chinese factories return to production, but don't have enough containers to pack their goods for export, we're still going to be hurting for them.  It's going to be tough for several months at least.

On the other hand, Tom Luongo notes a potentially positive side to the economic downturn.

... the choice between inflation and deflation is a non-choice. They are two sides of the same coin. The question is only who benefits from which side.

Those in power always choose inflation because, in their minds, it is less upsetting to the social order than deflation.

And their power rests on maintaining the current social order.

Deflation benefits savers and, frankly, normal people who don’t have access to new money at the lowest available prices, those set by the Fed’s discount window.

It gives them back power stolen from them through inflation.

. . .

I like to think of global trade in real goods as the M0, or base money, of the global financial system and the oil trade that which is the M0 of that.

All of the credit, government debt, corporate debt, stocks prices and the rest are simply credit derivatives in a fractional reserve banking system of that fundamental trade in goods and services.

And the value of the monetary base for global trade was just halved in the last six weeks with the price of oil crashing from $70 per barrel (Brent) to around $35.

. . .

This move will force trillions in debt to be liquidated. Prices will adjust down. Debtor economies which are in desperate need of U.S. dollars, just had their energy costs cut in half, making it far easier for real people to get to work, buy food, pay off debt and build a life for themselves.

Those who have saved in real assets, like gold, just saw their wealth double in real terms over the past few days.

. . .

The number of dollars you have is irrelevant. It is only what you can buy with that money that gives that money power.

Deflation is the transfer of wealth back from debtors to savers through the increase in purchasing power of your money and the liquidation of over-priced assets by desperate debtors trying to remain solvent.

Go read the whole thing.  I think he makes a good point.

Peter